Luxury home prices in SoCal now also falling

According to a story in the L.A. Times, prices of luxury homes are also starting to feel the impact of a slower market. Although owners of pricier homes can withstand pricing declines longer than entry-level buyers with resetting mortgages, eventually the rich need to sell too and must lower prices in order to make a sale:

The rich may indeed be like the rest of us. Prices of their homes are now falling too.

Gated mansions and hillside estates have held their own through most of the real estate slump, but data released Monday showed big drops in the region's most exclusive neighborhoods...

Expensive markets often resist declines for several reasons. Sellers in high-priced areas often have a large amount of equity in their homes or own them outright. That makes them more able to sit on their houses and ride out a market downturn than people desperate to unload a house with a mortgage they can't handle.

But with the passage of time, sellers who want to move but have been waiting for a market turnaround grow weary of waiting, Berkeley professor Davidoff said.

"It's like being in a teakettle. People eventually want to get out," he said...

But some affluent buyers say high prices, not tough credit standards, are keeping them from purchasing a home. It's simple, they say: Just as in the under- $500,000 market, buyers will come forward in expensive neighborhoods when prices fall.

Simon Lee, a commercial real estate investor who has been shopping for a house in Bel-Air, Pacific Palisades and Brentwood, said he believes prices in those areas are still inflated in today's market.

"I think it needs a major adjustment, 25% or 30%," he said.

Lee said he was among a small group of bargain hunters scouring these Westside neighborhoods for homes priced under $2 million.

"I see the same people every week at the open houses," he said.